SARS proposes tax changes – including dealing with disputes

The South African Revenue Service (SARS) is dealing with a growing backlog of tax disputes, and new laws are being proposed to make it easier to deal with them.

The draft 2024 Tax Administration Laws Amendments Bill (TALAB) and the accompanying memorandum on the objects were published on 1 August 2024 for public comment.

Comments on the draft TALAB are due by 31 August 2024.

According to tax experts at PwC, the proposed laws carry at least six significant proposals that will impact taxpayers and their tax affairs, which should be noted and considered.

• Natural persons may appear on behalf of the taxpayer in the tax court

The proposed addition of subsection 3 to section 12 of the Tax Administration Act (TAA) provides that natural persons may appear on behalf of a taxpayer in the tax court if the president of the tax court is satisfied that such natural person is a “fit and proper” person to appear on the taxpayer’s behalf.

PwC said that the “fit and proper” threshold is ordinarily used in the context of legal professionals and is a requirement governed by the Legal Practice Act.

“It is therefore hoped that further clarification will be provided in relation to how the ‘fit and proper’ test will be applied to natural persons who are not legal professionals,” it said.

• Introduction of the alternative dispute resolution (ADR) process at the objection stage of a tax dispute

Given that SARS is dealing with a backlog in tax disputes, it is proposing that it would be more efficient for taxpayers to be able to follow the ADR route at the objection stage instead of having to lodge an appeal before ADR becomes available.

PwC said that this raises several questions, such as whether a taxpayer will be able to continue with the objection and appeal process should ADR fail, and how the process will practically be implemented.

However, the proposal does give a better route to resolving disputes without having to land up in court.

• Requesting an extension to lodge an appeal

This proposed amendment aims to create an additional remedy for a taxpayer to approach the tax court for an extension of up to 120 business days to lodge its appeal should such extension be in the “interest of justice”.

• Promotion of the use of the tax board

This proposal is to remove the requirement that a senior SARS official and the taxpayer must agree on a matter to be referred to the tax board if it does not exceed the threshold.

“Rather, it is proposed that a matter will automatically be heard by the tax board in the first instance unless SARS and the taxpayer agree that the matter be heard by the tax court,” PwC said.

To promote the utilisation of the tax board, PwC said it would be interesting to see whether the monetary jurisdiction of the tax board, which is currently R1 million, will be increased.

• The election or appointment of a public officer of a company

Given that companies are automatically registered for income tax on formation, it is proposed that the one‐month period within which the public officer must first be appointed be removed and that a public officer be appointed at formation of the company.

According to PwC, where a company fails to appoint a public officer at the time of formation, the proposed amendment provides for a default rule that senior company officials will be regarded as the public officer in order of priority.

• Always in contact

PwC said it is also important for taxpayers to take note of section 247 of the tax proposals.

This provides that SARS may serve, deliver or send notices or other documents provided for under a tax Act to an address provided by the company—notably a postal address, physical address or electronic address.

“In this regard, it is important for taxpayers to ensure that their addresses, as communicated to SARS, are up to date at all times,” the group said.

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